[Budget of the United States Government, Fiscal Year 1998]
[Page 117-122]
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9. SUPPORTING AMERICA'S GLOBAL LEADERSHIP
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The challenge before us plainly is two-fold--to seize the opportunities for more
people to enjoy peace and freedom, security and prosperity, and to move
strongly and swiftly against the dangers that change has produced.
President Clinton
September 24, 1996
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This budget fully supports America's global leadership and advances
our national goals--protecting our vital strategic interests and
expanding the reach of democratic governance, ensuring our influence in
the international community, promoting sustainable development and the
expansion of free markets and American exports, and responding to new
international problems and humanitarian emergencies that can undermine
our security.
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Table 9-1. INTERNATIONAL DISCRETIONARY PROGRAMS
(Budget authority, dollar amounts in millions)
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Percent Percent
1993 1997 1998 2002 Change: Change:
Actual Estimate \1\ Proposed Proposed 1993 to 1997 to
1997 2002
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International development and humanitarian
assistance................................... 8,900 6,644 7,712 6,978 -25% +5%
International security assistance............. 6,148 5,928 5,959 6,041 -4% +2%
Conduct of foreign affairs.................... 4,300 3,890 4,164 4,026 -10% +3%
Foreign information and exchange activities... 1,247 1,098 1,087 1,070 -12% -3%
International financial programs.............. 12,662 549 4,052 647 -96% +18%
IMF programs................................ (12,063) ............ (3,521) ........ NA NA
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Total, International discretionary programs... 33,257 18,109 22,974 18,762 -46% +4%
Total, excluding IMF programs................. 21,194 18,109 19,453 18,762 -15% +4%
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NA = Not applicable.
\1\ Consistent with changes in the 1996 Farm Bill, the P.L. 480 Title I direct credit program has been
reclassified from International Affairs programs to Agriculture programs starting in 1996.
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Protecting America's key strategic interests remains a timeless goal
of our diplomacy. As we move toward the 21st Century, we have a great
opportunity to expand the scope of democracy, further ensuring that our
interests remain unthreatened. Facing the dilemmas of peacekeeping,
regional crises, and economic change, the international community needs
the United States as a leader and a full partner, meeting its
international commitments. Advancing U.S. interests in a global economy
brings expanded missions to our diplomacy and trade strategy. A less-
orderly world also creates new challenges to our security--from regional
and ethnic conflicts, the proliferation of weapons of mass
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destruction, international terrorism and crime, narcotics, and environmental
degradation.
With such a broad agenda for leadership, America must not withdraw
into isolationism and protectionism or fail to provide the resources
required to carry out this mission. The budget proposes $19.5 billion
for ongoing international affairs programs. While this request is seven
percent above the 1997 level, it constitutes only slightly over one
percent of the budget and 0.25 percent of Gross Domestic Product.
Protecting American Security and Promoting Democracy
The first goal of America's international strategy must be to promote
and protect our interests in regions that historically have been
critical to our security. The Administration's record is encouraging.
Through skilled diplomacy, the judicious use of military force, and
carefully targeted bilateral and multilateral economic assistance, the
United States has advanced the peace process in Europe and the Middle
East, reducing threats to our interests in these key regions. Through
diplomatic leadership, economic assistance, and trade negotiations, we
have maintained our leadership in Asia. Our goals are to secure these
achievements, advance the peace process, and deepen regional cooperation
in the future.
Perhaps the most serious national security threat facing the Nation
today hinges on the course of events over the next few years in the New
Independent States (NIS) of the former Soviet Union. We have made
substantial progress in helping encourage the emergence of free markets
and democracy in the NIS. In particular, our relations with Russia are
strong. The United States has provided unwavering support for the
emergence of democracy in Russia, leading this past year to the first
free presidential reelection in Russian history. Some other NIS
countries are progressing more slowly toward democracy and free markets,
but overall regional progress has been remarkable.
Nevertheless, the June 1996 Russian elections represent not only a
success but a warning--the latter embodied in the large vote for
President Yeltsin's opposition, an opposition that derived its strength
from Russia's severe economic distress. The Administration believes it
is absolutely critical, at this turning point, to demonstrate our
continuing support for democratic reform and free markets in Russia and
throughout the NIS; the ultimate success of this process is vital to our
national security. Moreover, we must begin to shape our assistance
program in ways that support the mature trade and investment
relationship that is starting to emerge between the United States and
the countries in this region. Thus, the budget proposes $900 million for
NIS funding, a 44-percent increase over 1997. The increase includes a
Partnership for Freedom initiative, designed to initiate a new phase of
U.S. engagement with NIS countries focused on trade and investment,
long-term cooperative activities, and partnerships.
The region at the heart of the Cold War conflict--Central Europe--has
made enormous progress toward institutionalizing free markets and
democracy. It is no longer a threat to American and European security;
it is starting to be a partner in the transatlantic community. The
economies of the Northern tier countries, such as Poland, the Czech
Republic, and Hungary, are largely free and privatized; they are moving
from direct assistance, which soon they will no longer require, to
significant economic integration with the United States and Western
Europe. At the same time, countries in this region are reshaping their
security relationships with the West as they move toward potential
membership in NATO.
Central European countries in the Southern tier also have made great
progress. U.S. leadership has been critical in ending the bloody
hostilities in Bosnia, establishing new governments through free
elections, and beginning economic reconstruction. The pace of
reconciliation and recovery remains gradual, and the need for continued
American leadership is great. The other countries in the southern part
of this region also look to the United States to remain committed to
their struggle to create democratic governments and free, open markets.
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The budget proposes to increase funding for economic assistance in
Central Europe to $492 million--including the final $200 million
installment on the U.S. commitment to Bosnian reconstruction. While
programs for the Northern tier are phasing down, we must continue to
support implementation of the Dayton Peace Accords and to sustain the
emergence of free market democracies in the Southern tier. In addition,
the budget seeks to increase support for foreign military financing for
the countries of Central and Eastern Europe through the President's
Partnership for Peace initiative, which will facilitate their efforts to
meet the conditions for membership in NATO.
Our strategic interest in peace in the Middle East is as strong as
ever. The peace process has achieved much already. The need for
reconciliation remains urgent, and America continues to play a
leadership role in the effort to craft a durable, comprehensive regional
peace. The budget proposes $5.3 billion for military financing grants
and economic support to sustain the Middle East peace process. The
proposed increase of nearly $100 million includes $52.5 million for an
initial U.S. contribution for the Bank for Economic Cooperation and
Development in the Middle East and North Africa, which will play a key
role in promoting regional economic integration. The budget also
provides additional security assistance to Jordan, recognizing that
country's needs and its important contribution to the peace process.
The rest of our economic and security assistance programs are designed
to support peace and democracy in countries and regions where our
leadership has helped those processes emerge: consolidating democratic
gains in Haiti; supporting reconciliation and peace in Guatemala and
Cambodia; and strengthening the capacity of African governments to
provide regional peacekeeping on that troubled continent.
Ensuring America's Leadership in the International Community
Following World War II, the United States assumed a unique leadership
role in building international institutions to bring the world's nations
together to meet mutual security and economic needs. It took an alliance
to win the war, and it clearly would take an alliance to ensure the
peace. We sponsored and provided significant funding for the United
Nations, the International Monetary Fund, and the World Bank, along with
specialized and regional security and financial institutions that became
the foundation of international cooperation during the Cold War.
To ensure financial stability for this international community, the
members of many of these organizations entered into treaties or similar
instruments committing them to pay shares (or ``assessments'') of the
organizations' budgets. Congress ratified these agreements, making them
binding on us. For international financial institutions, like the World
Bank and its regional partners, the United States has made firm
commitments to regular replenishments, subject to the congressional
authorization and appropriations processes.
Now, America's leadership in this international institutional network
is threatened. In recent years, Congress has not fully appropriated the
funds needed to meet the treaty-bound assessments of international
organizations or our commitments to the multilateral banks. As a result,
U.S. arrears now total over $1 billion to the United Nations and other
organizations, much of it for peacekeeping operations, and over $850
million to financial institutions. Congress has raised some legitimate
concerns about how these organizations operate, but America's failure to
meet its obligations has undercut our efforts to achieve reforms on
which the Administration and Congress agree. Today, our ability to lead,
especially in the process of institutional reform, is being seriously
undermined.
The Administration believes that we must end the stalemate this year--
and that we can do so consistent with our goal of institutional reform.
With new leadership in the United Nations, we have a unique opportunity.
The budget proposes to fully fund the 1998 assessments for the United
Nations, affiliated organizations, and peacekeeping, and to pay $100
million of our arrears. It also seeks a one-time, $921 million advance
appropriation for the balance of U.N. and related organiza-
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tion arrears, to become available in 1999. The release of these
appropriated arrears would depend on the adoption of a series of
reforms in the coming year, specific to each organization, that should
reduce the annual amount that we must pay these organizations, starting
with their next biennial budgets. These reforms would include a reduction
in the U.S. share of organizational budgets, management reforms yielding
lower organizational budgets, and the elimination of, or U.S. withdrawal
from, low-priority programs and organizations.
The Administration wants to work closely with Congress to shape this
package, lowering out-year funding requirements while maintaining strong
U.S. leadership in organizations and programs important to our national
interests. Enacting the advance appropriation is an essential step in
achieving these objectives. It would show that we recognize our legal
obligations and are determined to maintain the sanctity of our treaty
commitments as we press for changes in the organizations. It would give
us the leverage to mobilize support from other nations for the reforms
we seek and for the lowering of our future assessments. Failure to
arrive at an agreed-upon solution this year will put U.S. international
leadership at risk in the next century.
We are equally committed to restoring our leadership in, and
reforming, the multilateral development banks (MDBs). Our commitments to
them represent America's full-faith pledge. Moreover, the MDBs already
have undertaken significant reforms in response to Administration and
congressional concerns, including cuts in administrative expenses. The
budget would eliminate our arrears over the next three years while
meeting ongoing commitments that were negotiated down by 40 percent from
previous funding agreements. The budget also includes funds to eliminate
all arrears to the World Bank's International Development Association
affiliate that lends to the world's poorest countries, many of them in
Africa. Future budgets would seek to eliminate all of the arrears, while
continuing our success in lowering the level of future U.S. commitments.
Our leadership in international institutions also has been critical in
preventing international financial crises. As the Mexican peso crisis
demonstrated, the increased interdependence of our trading and monetary
systems means that a monetary crisis in any major trading nation affects
all nations. Consequently, the G-10 nations and a number of other
current and emerging economic powers have negotiated the New
Arrangements to Borrow (NAB), in order to provide a credit line for the
International Monetary Fund (IMF) in cases when a monetary crises in any
country could threaten the stability of the international monetary
system. The budget proposes a one-time appropriation of $3.5 billion in
budget authority for the U.S. share, but it will not count as an outlay
or increase the deficit; the United States will receive an increase in
its international reserve assets that corresponds to any transfer to the
IMF under the NAB.
Promoting an Open Trading System
The Administration remains committed to opening global markets and
integrating the global economic system, which has become a key element
of continuing economic prosperity here at home. Achieving this goal is
increasingly central to our global diplomatic activities.
We are helping to lay the groundwork for sustained, non-inflationary
growth into the next century by implementing the North American Free
Trade Agreement and the multilateral trade agreements concluded during
the Uruguay Round. We are conducting a vigorous follow-up to ensure that
we receive the full benefit of these agreements. At the December 1996
World Trade Organization ministerial meeting in Singapore, for example,
negotiators reached agreement on lowering many of the remaining barriers
to trade in information technology, which will significantly benefit
U.S. firms and workers. We are finalizing our anti-dumping and
countervailing duty regulations, which implement commitments made in the
Uruguay Round.
To promote other, mutually-beneficial trade relationships, the
Administration will propose legislation for ``fast-track'' authority to
nego-
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tiate greater trade liberalization.\1\ It also will propose to
extend the authorization of the Generalized System of Preferences for
developing countries beyond its current expiration date of May 31, 1997
and to give the eligible countries of the Caribbean Basin Initiative
expanded trade benefits.
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\1\ Fast track is a procedure designed to expedite congressional
approval of trade agreements between the United States and other
nations.
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We are more closely integrating the Government's trade promotion
activities through the Trade Promotion Coordinating Committee (TPCC),
creating a synergy among agency trade programs that will significantly
improve American business' ability to win contracts overseas, and
creating export-related jobs at home. The budget puts a high priority on
programs that help U.S. exporters meet foreign competition, and TPCC
agencies are developing rigorous performance measures to help ensure
that programs in this area are effective.
As discussed earlier in this chapter, U.S. assistance is important in
encouraging the emergence of free market economies in Central Europe and
the NIS, where our programs increasingly focus on facilitating a mature
trade and investment relationship with the United States.
Over time, our bilateral development assistance, provided through the
U.S. Agency for International Development (USAID), likewise promotes the
emergence of growing market economies in developing countries by
supporting market-friendly policies and key institutions. Economic
growth and market-oriented policy reforms in the developing world create
growing demand for U.S. goods and services as well as investment
opportunities for U.S. businesses. On a larger scale, the multilateral
development banks also promote economic growth and increased demand for
our exports. The budget proposes that our bilateral development
assistance and contributions to the multilateral development banks grow
by 25 percent--from $2.6 billion to $3.3 billion.
Three smaller agencies provide U.S. Government financial support for
American exports. The Export-Import Bank is a principal source of export
assistance, offering loans, loan guarantees, and insurance for exports,
primarily of capital goods. To assure that its programs operate as
economically as possible, the Bank is considering raising some fees,
thereby lowering net spending in 1998 while maintaining a strong overall
level of export support. The Overseas Private Investment Corporation
(OPIC) provides political risk insurance for, and finances, U.S.
investment in developing countries, leading to greater U.S. exports. The
budget proposes to maintain 1998 OPIC funding close to the 1997 level.
The Trade and Development Agency (TDA) makes grants for feasibility
studies of capital projects abroad; subsequent implementation of these
projects can generate exports of U.S. goods and services. The budget
increases funding for TDA over the 1997 level. With the new emphasis on
trade and investment in the NIS, the Export-Import Bank, OPIC, and TDA
may well become important channels for further funding directed at this
region.
Along with the Government's financial support for U.S. exports, the
Commerce Department's International Trade Administration (ITA) promotes
U.S. trade through its network of Export Assistance Centers and overseas
offices. These centers and offices provide export counseling to the
American sector. The budget proposes a slight increase for ITA compared
to 1997.
Leading the Response to New International Challenges
Another fundamental goal of our international leadership, and an
increasing focus of our diplomacy, is meeting the new transnational
threats to U.S. and global security--the proliferation of weapons of
mass destruction, drug trafficking and the spread of crime and terrorism
on an international scale, unrestrained population growth, and
environmental degradation. We also must sustain our leadership in
meeting the continuing challenge of refugee flows and natural and human-
made disasters.
In 1997, the Administration will seek Senate ratification of the
Comprehensive Test Ban Treaty and the Chemical Weapons Convention, both
critical to our long-term security and to preventing the spread of
weapons of mass destruction. The budget supports the implementation of
these agreements. U.S. diplomacy and law enforcement activities are
playing
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a key role in preventing the spread of such weapons to outlaw states such
as Libya, Iraq, Iran, Syria, and North Korea. The Defense
Department's Nunn-Lugar program and the State Department's Nonproliferation
and Disarmament Fund help support these efforts. (For more information on
the Nunn-Lugar program, see Chapter 10.) In addition, U.S. support for
such organizations as the International Atomic Energy Agency and the
Korean Peninsula Energy Development Organization is critical to meeting
our non-proliferation goals.
U.S. bilateral assistance programs are also critical to tackling other
important transnational problems. Our international counter-narcotics
efforts are making real progress in drug-producing countries. After
several years of deeply cutting the Administration's budget requests for
counter-narcotics purposes, Congress provided the full requested amount
for 1997, permitting the United States to intensify its efforts to curb
cocaine production in the Andean countries by offering growers
attractive economic alternatives. The budget proposes $230 million for
the State Department's narcotics and anti-crime programs, eight percent
more than in 1997, with most of the increase focussed on programs in
Peru.
In addition, USAID development assistance and U.S. contributions to
international efforts, such as the Global Environment Facility, support
large and successful programs to improve the environment and reduce
population growth. The United States is the recognized world leader in
promoting safe and effective family planning projects.
Disasters, humanitarian crises, and refugee flows are certain to
remain central challenges to our leadership. The budget continues our
historically strong commitment to refugee and disaster relief, proposing
$1.7 billion, which sustains these programs at the 1997 level. This
assistance, which reflects the humanitarian spirit of all Americans, has
long enjoyed bipartisan support.
Conducting Foreign Affairs
An effective American diplomacy is the critical foundation for meeting
our foreign policy goals. The budget supports a strong U.S. presence at
over 250 embassies and other posts overseas, promoting U.S. interests
abroad and protecting and serving Americans by providing consular
services. These activities include the basic work of diplomacy--the
reporting, analysis, and negotiations that often go unnoticed but that
allow us to anticipate and prevent threats to our national security as
well as discover new opportunities to promote American interests. The
budget proposes $2.7 billion for the State Department to maintain its
worldwide operations, modernize its information technology and
communications systems, and accommodate security and facility
requirements at posts abroad.
The budget also proposes two significant innovations in State
Department management.
<bullet> One would make about $600 million in immigration, passport,
and other fees, which now go to the Treasury Department,
available to finance State Department operations directly.
Improvements in how these State Department operations perform
will, thus, be directly linked to the receipts they generate.
<bullet> The other innovation restructures the management of the
diplomatic platform to support the overseas activities of
other Federal agencies. This reform recognizes the magnitude
of the State Department's overseas administrative workload,
the need to carry it out efficiently, and the need to allocate
the costs of overseas support fairly among agencies. With
approval of the President's Management Council, the various
agencies represented abroad have designed a new overseas
administrative arrangement--the International Cooperative
Administrative Support Services program. The Administration
will propose to fund this new arrangement in a budget
amendment that it will send to Congress shortly after
transmitting the budget.